Jun 18, 2013 | Uncategorized

SEC Update – Custody Rule Deficiencies

A risk alert was recently released by the SEC.  It addresses common deficiencies related to Rule 206(4)-2, also know as the “Custody Rule.”

It identified four categories of deficiencies:

  1. Failure by an adviser to recognize situations in which it has custody under the Custody Rule
  2. Failure to meet the Custody Rule’s surprise examination requirements
  3. Failure to satisfy certain “qualified custodian” requirements under the Custody Rule
  4. Failure to properly engage independent auditors or otherwise comply with the requirements for audits of pooled investment vehicles under the Custody Rule.

You can review the risk alert here.  Make sure that the deficiencies outlined do not apply to your firm.